The impact of outsourcing on manufacturing firms

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Kampala International University, College of Economics and Management
The study sought to investigate the effect of outsourcing on organizational performance. The study was guided by the following research objectives, to investigate whether the company undertakes outsourcing of projects/services, to establish whether outsourcing programs at the company achieve their stated objectives of improving organizational performance, productivity, market share, and quality and to investigate the factors that are associated with the success or failure of outsourcing programs. The study findings showed that the company does carry out outsourcing of services from third party service providers as shown by the greater majority of respondents. The company though did not suffer adverse disadvantages of outsourcing as only 46.15% of the respondents believed that the company faced disadvantages as a result of its outsourcing of projects/services to third parties. Instead the company's outsourcing programs did offer the rewards as was shown by just over 92% of the respondents believing that outsourcing benefited the company. It was thus concluded that the company's outsourcing programs marginally satisfied the company's outsourcing objectives. The findings also showed that when it came to outsourcing management, the company was effective and thus concluded that factors that were considered by the company before outsourcing were Cost restructuring, Quality Appraisal, Current Employee skills, Appraisal process and legal issues, Staffing issues and Risk management. Major recommendations to the study were that the company should reappraise its objectives for seeking to outsource particular functions of the business. The company should invest in further training for its own personnel on core aspects of what services the company carries out in-house and what it out sources. This would also act as an incentive to the current staff who may not feel completely secure in their jobs. This insecurity counteracts marginal gains that outsourcing may be providing to the company in terms of productivity.
A research report submitted to the school of business and management in partial fulfillment for the award of a Bachelor of Supplies and procurement of Kampala International University
Outsourcing, Manufacturing firms